Qantas under fire over payout to former CEO
Updated
Australian airline Qantas has attracted criticism for its apparent generosity to former CEO Geoff Dixon. Mr Dixon retired in November last year and took home almost $US10 million for just nine months' work. The revelation in the company's annual report has it scrambling to explain the payout at a time when executive pay scales are under scrutiny. But Qantas has an even larger issue on its plate - no less than the biggest shake-out of the Asian aviation industry in a decade.
Presenter: Karon Snowdon
Speakers: Steve Purvinas, general secretary, Aircraft Engineers Association; Derek Sadubin, chief operating officer, Centre for Asia Pacific Aviation
- Listen:
- Windows Media
SNOWDON: The size of Geoff Dixon's pay brought criticism from shareholders facing falling returns and unions facing job cuts. But Qantas brushed those concerns aside saying in a statement the Dixon payments were in line with employment agreements. The fuss will be a short term blip in the bigger picture for Qantas. In his annual report Chairman Leigh Clifford notes the estimated $US9 billion collectively lost by the world's airlines in this calender year.
And if the financial crisis has not been good for airlines generally, its been hell for Japan's major carrier Japan Airlines. The struggling Japanese company is in desperate need of a white knight - one carrying saddle bags full of cash.
SADUBIN: Japan Airlines probably needs two or three billion dollars.
SNOWDON: Derek Sadubin is the Chief Operating Officer at the Centre for Asia Pacific Aviation. He says saving Japan Airlines or JAL, will involve the biggest shakeout of Asian aviation in a decade - one Qantas can't afford to ignore.
SADUBIN: The Japan Airlines issue stems from the fact the US government and the Japanese government are negotiating an open-skies agreement whereby a lot of restrictions on airlines flying into those markets and beyond could be removed. If you can open up the Japanese market you can really unlock the potential in North Asia and if you unlock that potential in North Asia you've opened one of the biggest aviation markets in the next 20 years and that's why there's considerable buyer interest.
SNOWDON: Japan Airlines has recorded a $US1 billion loss for its first quarter with a full year loss - its fourth in five years. The new Japanese government can't afford politically to bail it out, so it's looking for a partner and is in talks with America's Delta Air and Air France of the Skyteam Alliance. Their competition in the air partnership stakes is Oneworld, of which JAL is a member, along with the other main players Qantas, American Airlines and British Airways. Derek Sadubin says Delta has more to offer the Japanese.
SADUBIN: You know everyone is saying the existing alliance partners should have the upper hand but at the end of the day Japan Airlines needs a lot of money and I think the money will talk. But look I think anything can happen in this environment and if the decision within the grouping is its too important to lose JAL then Qantas and its bankers may have to come to the party as well. It's really going to shake down over the next three to four weeks or so, so it's going to be very interesting to see how it develops.
SNOWDON: It's a big stakes game and new chief executive at Qantas Alan Joyce has confirmed to an Australian national newspaper the Oneworld alliance partners are looking at all options to keep JAL in their club - but there's just three weeks to decide. Derek Sadubin says at stake is not only the survival of JAL and its huge market potential - in 2006 it carried 58 million passengers. But he says it will also put pressure on China and Korea to relax their market controls.
SADUBIN: We feel there could be a domino effect in the region.
SNOWDON: Whoever wins the once in a decade prize, back in Sydney new Qantas boss Alan Joyce has angry unions to contend with. Steve Purvinas, the general secretary of the Aircraft Engineers Union, says he's also unhappy about Joyce's salary even though it's not even close to Geoff Dixon's.
PURVINAS: I think it's an obscene outcome if you've got any one person thinking that they're worth $3.6 million a year, that's just unAustralian.
